How The Cult of Oatly Nearly Brought Down the Company
Is it possible to drown in success? Can you do so well that the very demand that kept you in business strangles you?
The answer is yes, and much like drowning in chocolate, it’s not as fun as you’d imagine.
In 2016, Swedish oat milk company Oatly exploded into the US market and consumers went wild. Initially only providing their product to cafes, over-excited consumers started buying bottles directly from their baristas in secret under-the-table deals.
After Oatly started noticing the enormous appeal of their product in the States, they started shipping product from their European factory to US supermarkets to meet demand.
But they couldn’t ship them fast enough, and stores couldn’t keep them on the shelves for more than a few hours.
Slow and Steady
Oatly’s original strategy was to test the US market by introducing oat milk to customers slowly through their local, trusted barista.
They hoped that eventually demand would increase and they’d begin introducing the product into a few supermarkets, growing gradually.
But while introducing the product slowly was a tactical decision, it was accidentally an incredible marketing decision. Because it turns out that giving Americans limited access to a product through coffee shops doesn’t convert to rational consuming; it turns into rabid FOMO fever.
Everyone’s got to have a taste of the limited supply product, and word travels extremely fast.
This feverish desire for the limited supply product snowballed into a shortage that nearly wrecked the reputation of the brand. In 2018 there was an infamous shortage of the barista edition of Oatly’s milk, and this shortage tore strips off the good-will they had been banking since the 2012 takeover of the new CEO.
The dramatic shortage of product was due to an unbelievable and unexpected sudden rise in oat milk sales. According to Neilson, oat milk sales in the US skyrocketed in 2018 $6 to almost $40 million; an increase of over 500%.
What Oatly had failed to realise was that they’d started a fanatical oat milk religion among the people that had tried it, loved it, and loved their message.
People who loved Oatly developed an addiction to the taste and the brand, and while that’s the goal of every company, it’s also something that comes with challenges and expectations.
Stores couldn’t hold onto a single bottle, and customers began getting desperate for their fix. So opportunistic sharks started buying up bottles and selling them on eBay and Amazon at enormous markups. Oatly had started losing control of the situation.
Consumers were getting mad, and competitors such as Quaker were starting to wise up and release competing products to fill the gap.
More consumers were being converted to the oat milk cause daily, and Oatly couldn’t ship product at the rate that the oat milk religion was growing.
Everything looked like it was spinning out of control, and it may have resulted in a mountain of negative customer experiences that Oatly would never have been able to crawl out of.
It was a PR disaster, and Oatly needed their marketing department to clear it up. (Or as they call it, their department of mind control). Luckily, they’d had some success dealing with trials in the past.
There’s Always a Bigger Fish
At the Slush 2019 conference, Oatly’s mind control manager John Schoolcraft explained the company’s history of dealing with calamity.
They had already dealt with the Swedish Milk Lobby during their formative years, and the experience had taught them that they’re willing and able to fight for their turf.
The Swedish Milk Lobby is an organisation allegedly as powerful and influential as the American gun lobby. They sued Oatly for claiming of its oat milk that “it’s like milk, but for humans.”
They didn’t apprieciate the implication that cows milk isn’t meant for humans, and that it’s somehow old fashioned or a food product best relegated to history.
Oatly’s response to the lawsuit was to post the suit online as it was happening and take full-page ads out in Swedish newspapers to publicise what was happening.
Oatly claims that the publicity gained from being sued by the milk lobby and not backing down directly influenced their ability to jump from $20 million to $200 million in sales.
They took what they’d learned from their experience in Sweden, and applied to America.
They’d learned that being visible, honest and quirky, translated into extended consumer loyalty that saw them through their rocky situation.
They started posting cute videos to YouTube, commissioning an environmental impact report to investigate the impact of milk on the environment, and plastering their message everywhere.
It’s like milk, but for humans.
In 2019 they got their act together and opened a 20,000 sq ft facility in New Jersey to locally produce their product so that shipping would never again contribute to future shortages.
A second facility is currently being built and will be opened in Utah in Spring of this year.
And if you’re a lover of both Oatly and Starbucks, then it’s time to celebrate. The two have recently announced a 1,300 store test across Starbucks locations in seven US states.
So now that the United States has been pretty much locked up, Oatly is looking to China for its next attempt at market domination.
They’ve started with the same approach they used to enter the States. They’ve infiltrated local coffee shops and will move out from there.
I actually first learned about Oatly because my local barista started offering it a few weeks ago, now I buy it from a local import supermarket who brings it in from Sweden.
The tactic worked on me as it has millions of other people, and will work on millions more. So what about you? Will you join the cult of Oatly?